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1.1 Business Activity
'1.1.1 Business activity as a means of adding value and meeting customer needs' 'Demonstrate understanding of business activity in adding value and helping to satisfy the needs of customers in a changing competitive environment.' Summary: 1. We all have needs and wants. 2. The main purpose of business activity is to supply the goods and services people want. 3. The objective of most private sector businesses is making a profit. 4. The main objective of public enterprise is to provide services to the local and national community. 5. The main objective of non-profit making organizations is to meet a perceived social need or to provide help to a specific section of the community that is not met by private or public enterprise. 6. Businesses produce goods and services using scare resources known as the factors of production: land, labor, capital, enterprise. '' ''7. Value is added to the resources because the work carried out to product the finished product has a value that increases the value of the parts and raw materials used • Understand the purpose of business activity Businesses are organizations that have been set up to produce goods or/and services. They supply these goods and services to individuals and other business organizations that want them. Case study : Star news is a small supermarket in Slough and it is a sole trader owned by one person . They provide goods and services to the people for a small profit. They sell products like newpapers, magazines and everyday prodects such as chocolates, sweets and also provide lottery tickets and mobile phone top up. • Understand the concept of adding value Adding value' is the difference between the selling price of a product and cost of the raw materials used to make it. ' ''Value is added to the resources because the work carried out to product the finished product has a value that increases the value of the parts and raw materials used. example: The selling price of a laptop is $2000. The value of bought in softwares, parts of computer, hardware costs $500. The value added is $1500, this difference is not PROFIT for the company as so many other costs and expenses are taken into account too. ''• Understand the concepts of needs, wants and scarcity'' ''Needs''' are items that we must have in order to live such as food, drink, shelter, and clothing. '' Wants''' are items that we would like to have although we won’t die without them such as a car, a computer, and a holiday.'' '''''Scarcity ''is the result from limited resources and unlimited wants'' 'Explain the purpose of business activity in terms of the objects of non-profit making activity, private enterprise and public enterprise.' • Demonstrate an awareness that different business activities pursue different goals 'Business objectives are:' · Make a profit · Increase added value · Expand the business · Achieve business survival · To provide a service '1.1.2 Classification of local and national firms into primary, secondary and tertiary sectors' · '''Describe and classify business activity in terms of primary, secondary, and tertiary sectors #Primary – All those businesses which are related with extraction of raw materials such as mining, fishing, farming and logging are known as primary sector businesses'' #''Secondary – All businesses which manufactures and process the raw materials which can be used by the end consumersare known as secondary sector businesses. These include construction, compute and assembling , shoe factories, textile factories, etc.'' #''Tertiary – Where all the business which provides services and assists both the primary and secondary sector businesses can be classified as tertiary sector businesses, These include transportation, insurance, hospitals, educational institutions, showrooms, etc.'' [ Case study: British petroleum has its own oil wells and it extracts crude oil, this is primary sector activity. This oil is then converted into petroleum diesel and other by products, this is secondary business activity. After processing the oil into petroleum or diesel etc, the sell it to the consumer through petrol pumps, this is tertiary sector business activity. ] · ''· '' '1.1.3 Business growth and measurement of size' Show knowledge of the methods and problems of measuring the size of business units • Show understanding of the different methods of measuring the size of business units, e.g. number of employees, capital employed • Show awareness of the problems of using the different methods Why businesses grow and expand, problems connected to this and how they might be overcome • Understand the different ways by which a business can grow • Explain reasons why businesses seek to grow • Describe the problems connected with the growth of a business '1.1.4 Key features of own national economy' ''1. 'Demonstrate an awareness of the impact that business activity may have on the environment ''' • Use examples to illustrate concepts such as pollution and global warming '' ''• Understand some of the issues with regards to ‘sustainable development’ '' ''• Show awareness of the possible impact of business development upon depletion of natural resources '' 'Answer: ''' ''External costs '' · Environmental factors such as pollution from smoke, noise and chemicals '' ''· Spoiling the environment with buildings such as factories or the construction of roads '' ''· Damage from traffic through higher risk of accident and congestion '' ''· The destruction of natural habitats of wildlife and flowers '' ''· Endangering species of wildlife '' ''· An increase in global warming by cutting down forests and burning coal '' ''· Social factors such as unemployment and loss of amenities when a factory or business closes. '' ''' '' ''External benefits '' ''· Increase employment from the expansion of businesses, for example opening new factories '' ''· The economic regeneration of an area if new businesses move in '' ''· Increased training of a local workforce, making the workforce more adaptable '' ''· Improved amenities and living standards, for example new roads and schools '' '' '' ''2. '''Show understanding of the changing importance of these categories within their own national economy, in terms of employment and contribution to national wealth '' • Show awareness of the structure and importance of different sectors in your own national '' ''economy '' ''• Illustrate such changes with reference to appropriate examples ''Answer: '' ''The wealth of the country lies in its natural resources and other productive assets. How efficient the country uses its natural resources and other productive assets will determine the general standards of living of those living in the country. The efficiency of a country in using its natural resources can be measured by the amount of goods and services that are produced using them. An increase in goods and services produced will lead to an increase in general living standards in the country. The nations of the world are increasingly considering economic growth in terms of it sustainability. In other words, can growth be maintained not just for the present, but for future generations too? To be of lasting benefit, growth must be maintained. But despite major advances in technology and communications that have increased the productivity and availability of factors of production, people also potentially have unlimited wants and the resources available to satisfy them are limited. '' Category:Business Topics